The Activities of Buy-Side Analysts and the Determinants of Their Stock Recommendations

August 2016 | Sharp, Nathan Y.

We survey 344 buy-side analysts from 181 investment firms and conduct 16 detailed follow-up interviews to gain insights into the activities of buy-side analysts, including the determinants of their compensation, the inputs to their stock recommendations, their beliefs about financial reporting quality, and the role of sell-side analysts in buy-side research. One important finding is that 10-K or 10-Q reports are more useful than quarterly conference calls and management earnings guidance for determining buy-side analysts’ stock recommendations. Our results also suggest that sell-side analysts add value by providing buy-side analysts with in-depth industry knowledge and access to company management.

Author

Co-author(s)

  • Larry Brown
  • Andy Call
  • Michael Clement

Publication(s)

Journal of Accounting and Economics

Web Link

http://www.sciencedirect.com/science/article/pii/S0165410116300374